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2014 (7) TMI 411 - AT - Service TaxCENVAT Credit - Inability to produce original invoices - Penalty - Held that - As per Rule 9(1)(f) of the CENVAT Credit Rules, 2004, CENVAT Credit of input service can be taken only on the basis of invoice issued by provider of input service which means Original invoices and not copies of invoices. The appellant has admitted that it did not receive original invoices from the input service provider. Therefore, the appellant has wrongly availed the CENVAT Credit without an invoice prescribed under Rule 9(1)(f) of the CENVAT Credit Rules, 2004, and the same has been correctly held recoverable along with interest from them by the lower authorities under Rule 14 of the CENVAT Credit Rules, 2004. However, as the issue involved is availment of irregular CENVAT Credit by the appellant which were duly reflected in the statutory records hence penalty under Section 76 of the Finance Act, 1994 is not called for and the same is set aside. I reduce the penalty imposed on the appellant under Rule 15(3) of the CENVAT Credit Rules, 2004, as it existed during material time, from two thousand rupees to two hundred rupees. - Decided partly in favour of assessee.
Issues:
- Availment of irregular CENVAT Credit without original invoices - Denial of CENVAT Credit by lower appellate authority - Imposition of penalties under Section 76 of the Finance Act, 1994 and Rule 15(3) of the CENVAT Credit Rules, 2004 Analysis: Issue 1: Availment of irregular CENVAT Credit without original invoices The case involved M/s. Sky Net Work, a Cable Operator, who failed to produce CENVATABLE invoices in support of CENVAT Credit of Rs. 57,947/- during the scrutiny of their ST-3 Return. The jurisdictional Superintendent issued a Show Cause Notice for the recovery of the irregularly availed credit. Despite submitting documents later, the original adjudicating authority confirmed the demand, stating that the documents did not qualify for CENVAT Credit as they were not in original form and lacked the issuer's signatures. The appellant argued that they correctly availed the credit based on electronically generated bills, but the Revenue contended that the appellant did not receive original copies of invoices from the service providers, leading to the denial of the credit. Issue 2: Denial of CENVAT Credit by lower appellate authority The Commissioner (Appeals) upheld the denial of CENVAT Credit by the original adjudicating authority, emphasizing the requirement of original invoices for claiming CENVAT Credit under Rule 9(1)(f) of the CENVAT Credit Rules, 2004. The appellant's admission of not receiving original invoices from the service providers played a crucial role in the denial of credit. The lower authorities concluded that the appellant wrongly availed the credit without the prescribed invoices, leading to the recovery of the amount along with interest and penalties. Issue 3: Imposition of penalties under Section 76 of the Finance Act, 1994 and Rule 15(3) of the CENVAT Credit Rules, 2004 While the lower authorities imposed penalties under Section 76 of the Finance Act, 1994 and Rule 15(3) of the CENVAT Credit Rules, 2004, the appellate tribunal set aside the penalty under Section 76. The tribunal noted that the irregular CENVAT Credit was duly reflected in the statutory records, hence penalty under Section 76 was deemed unnecessary. However, the penalty under Rule 15(3) of the CENVAT Credit Rules, 2004, was reduced from Rs. 2,000 to Rs. 200 considering the circumstances. In conclusion, the appeal was disposed of with the decision to recover the irregularly availed CENVAT Credit due to the appellant's failure to produce original invoices, along with interest. The penalty under Section 76 was set aside, and the penalty under Rule 15(3) was reduced.
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